United States District Court, D. Colorado
CLINTON J. DAWSON, and JANELL DAWSON, Plaintiffs,
LITTON LOAN SERVICING, LP, and OCWEN LOAN SERVICING, LLC, Defendants.
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
CHRISTINE M. ARGUELLO, Judge.
Plaintiffs Clinton and Janell Dawson bring this action for violation of the CCPA and for tortious interference which are related to foreclosure proceedings that took place in state court against Defendants Litton Loan Servicing, LP ("Litton") and Ocwen Loan Servicing, LLC ("Ocwen"). For the reasons discussed below, both claims fail as a matter of law and Defendants' Motion for Summary Judgment is granted.
A. THE HOME AFFORDABLE MODIFICATION PROGRAM
In February 2009, the Secretary of the Treasury and the Director of the Federal Housing Finance Agency announced the Making Home Affordable program (the "MHA"), an effort to stem the then-prevailing foreclosure crisis. As part of the MHA, the Home Affordable Modification Program ("HAMP") was created. Under HAMP, borrowers who are struggling to pay their mortgages can apply to their loan servicer for a permanent loan modification to obtain a reduced monthly payment. See The Making Home Affordable Program, Dep'ts of the Treasury & Hous. and Urban Dev., http://www.makinghomeaffordable.gov (last visited September 26, 2014).
Before a borrower receives a permanent modification, the loan servicer and the borrower enter into a three-month trial period, during which the borrower makes lower monthly payments toward his mortgage. See Cave v. Saxon Mortg. Servs., Inc., No. 11-4586, 2012 WL 1957588 (E.D. Pa. May 30, 2012) (unpublished), vacated in part on other grounds on reconsideration, No. 11-4586, 2013 WL 460082 (E.D. Pa. Feb. 6, 2013) (unpublished) (determining complaint was well-pled). The terms of the trial period are governed by a form contract entitled "HAMP TPP" (the "TPP"). Id. The TPP states that the borrower will receive a permanent modification agreement if: (1) the borrower's representations of his financial state continue to be true; (2) the borrower complies with the terms of the temporary payment plan; (3) the borrower provides all required documentation; and (4) the lender determines that the borrower qualifies. The Making Home Affordable Program, Dep'ts of the Treasury & Hous. and Urban Dev., http://www.makinghomeaffordable.gov/for-partners/understanding-guidelines/ Documents/mhahandbook_41.pdf (last updated Dec. 13, 2012).
After a borrower applies for permanent modification, the loan servicer is required under HAMP regulations to determine, based on financial information submitted by the borrower, whether the borrower is eligible for a loan modification, which would reduce the borrower's monthly loan payment to 31% of his gross monthly income. The servicer then performs a Net Present Value ("NPV") test, which essentially evaluates if it will be financially beneficial for the lender to reduce the monthly payments. There are several tests employed to determine the NPV, but all formulas typically include consideration of several factors such as: cost of foreclosure; cost of modification; likelihood of default/ re-default; probability of cure for a modified vs. unmodified loan; type of loan; amount of unpaid principal balance; interest rate on the loan at origination; modifications; conditions of the property; remaining term of the loan; principal and interest before modification; borrower credit score; location of the property; insurance and taxes for the property; income of borrower; and home price projection. If the NPV test reveals that the modification is more valuable to the lender than no modification, the servicer must offer a contract to the borrower. If the modification would be less valuable, the loan servicer may take away the HAMP offer, which requires a "Non-Approval" notice to be sent to the borrower, along with other foreclosure prevention options. See id.
B. PLAINTIFFS' MORTGAGE LOAN, NOTE, AND DEED OF TRUST
On January 19, 2007, Plaintiffs borrowed the principal sum of $167, 000 (the "Loan") from Residential Acceptance Network, Inc. ("RAN"). In connection with the Loan, Plaintiffs executed a Balloon Note,  dated January 19, 2007 (the "Note") in favor of RAN and its successors and assigns. Under the terms of the Note, Plaintiffs promised to repay the Loan by making a principal and interest payment each month. A failure to pay the full amount of each monthly payment under the Note constituted a "default" of the Note.
Plaintiffs also executed a Deed of Trust in connection with the Loan, dated January 19, 2007 (the "Deed of Trust"), encumbering real property located at 309 Hill Drive, Grand Junction, Colorado 81503 (the "Property") for the benefit of RAN and its successors and assigns. Under the terms of the Deed of Trust, Plaintiffs irrevocably granted and conveyed all of their rights, title, and interests in and to the Property to the "Note Holder" as a security for the repayment of the Note. The Deed of Trust advised Plaintiffs that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower" and that an entity known as a "Loan Servicer" may collect the "Periodic Payments due under the Note and this Security Instrument" as well as perform "other mortgage loan servicing obligations under the Note." The Deed of Trust further provided that the "Lender" is not required to modify the obligations due under the Note or the Deed of Trust and that Lender's acceptance of any payments in amounts less than the amount then due shall not waive or preclude Lender from exercising his rights and remedies under the Deed of Trust including foreclosure.
Plaintiffs' Note and Deed of Trust (collectively, the "Loan Documents") were subsequently assigned and transferred to LaSalle Bank National Association, as Trustee for the C-Bass Mortgage Loan Asset-Backed Certificates,  Series 2007-CB4 (the "Trustee"). On March 30, 2007, Defendant Litton began servicing Plaintiffs' Loan.
C. PLAINTIFFS' DEFAULT AND ATTEMPTED LOAN MODIFICATION
Plaintiffs defaulted under the Loan Documents by failing to timely make their monthly payment due October 1, 2007. On December 20, 2007, Defendant Litton offered Plaintiffs a temporary Repayment Plan to assist Plaintiffs to get current on their Loan, which remained due for the outstanding October 1, 2007 payment. Plaintiffs continued to attempt to make payments but, in April 2009, Plaintiffs requested a loan modification from Defendant Litton and submitted corroborating financial materials for review and consideration. On July 6, 2009, Defendant Litton sent Plaintiffs a letter advising them that it was "unable to provide an alternative workout solution because" Plaintiffs did not have "sufficient income to meet [their] monthly household expenses and pay the monthly payment for the referenced mortgage."
On July 9, 2009, Plaintiffs again requested a loan modification. In response, Defendant Litton sent Plaintiffs an application for a Litton Loan Servicing customized Modification Workout Plan package (the "Litton Workout Package"), which outlined certain steps Plaintiffs needed to complete in order to be considered for a loan modification. To meet the requirements of the Litton Workout Package, Plaintiffs executed and delivered to Litton a Hardship Affidavit, dated July 23, 2009. Plaintiffs also executed and delivered to Defendant Litton a Litton Loan Workout Plan (Step One of Two-Step Documentation Process), dated July 24, 2009 (the "Litton Workout Plan"). The Litton Workout Plan had an effective date of August 1, 2009, and required Plaintiffs to, among other things, make three monthly trial period payments in the amount of $1, 247.17 per month commencing on August 1, 2009. It also contained several provisions and terms which Plaintiffs expressly agreed to and acknowledged including the following:
I understand that the Plan is not a modification of the Loan Documents and that the Loan Documents will not be modified unless and until (i) I meet all of the conditions required for modification, (ii) I receive a fully executed copy of a Modification Agreement, and (iii) the Modification Effective Date has passed. I further understand and agree that the Lender will not be obligated or bound to make any modification of the Loan Documents if I fail to meet any one of the requirements under the Plan." (Litton Workout Plan, p. 2, §(2)(G));
I agree... [t]hat all terms and provisions of the Loan Documents remain in full force and effect; nothing in this Plan shall be understood or construed to be a satisfaction or release in whole or in part of the obligations contained in the Loan Documents. The Lender and I will be bound by, and will comply with, all of the terms and provisions of the Loan Document.
On November 3, 2009, Defendant Litton sent Plaintiffs a letter notifying them it was still reviewing Plaintiffs' request for a loan modification but needed a "copy of the most recent bank statement including all pages (must be less than 90 days old)" to complete Plaintiffs' modification review. The letter also advised Plaintiffs that the trial period plan under the Litton Workout Plan had expired but, because Plaintiffs had made each of their trial period payments, the letter also advised Plaintiffs that they qualified for "a one-time ...